No. 32155 (SUB-NO. 4)

REVISION TO THE UNIFORM SYSTEM OF ACCOUNTS FOR CLASS I AND II COMMON AND CONTRACT MOTOR CARRIERS OF PROPERTY

(49 CFR 1207)

Decided February 10, 1976

Upon investigation and consideration of views, arguments, and representations of interested parties, certain revised accounting and reporting regulations concerning certain costs, governing Class I and Class II Common and Contract Motor Carriers of Property, are adopted to be effective January 1, 1976.

Harry C. Ames, Jr., and Marshall Kragen for National Tank Truck Carriers, Inc.

REPORT OF THE COMMISSION

BY THE COMMISSION:

By Notice of Proposed Rulemaking dated July 15, 1975, served August 4, 1975, and published in the Federal Register on August 7, 1975 (40 F.R. 33244), the Commission announced that it had under consideration certain revisions to the Uniform System of Accounts and Reports of Class I and Class II Common and Contract Motor Carriers of Property.

All interested parties were given the opportunity to submit their views and comments in writing by September 8, 1975.

BACKGROUND

On July 5, 1974, Chemical Leaham Tank Lines, Inc. (CLTL), filed a statement in response to the order of April 19, 1974, requesting the segregation and identification of certain costs in the Uniform System of Accounts for Instruction 28(A) Common and Contract Motor Carriers of Property. A similar statement was filed by National Tank Truck Carriers, Inc. (NTTC), on July 8, 1974. Manufacturing Chemists Association (MCA) replied to the CLTL petition on September 24, 1974.

The respondents argued that billing and collecting and cleaning and waste removal costs should, to the greatest extent possible, be segregated, identified, and attributed to the proper activity. The methodology for implementing these changes differed among the respondents.

Upon review and consideration of the aforementioned petitions, we proposed to segregate the Billing and Collecting Activity from the Platform and Terminal Activities. Based upon the respondents initial statements, we could not justify a revision to the uniform system of accounts for cleaning and disposal costs; therefore, we recommended that tank truck carriers establish subaccounts to provide for tank cleaning and disposal costs.

REPRESENTATIONS

The public notification of the proposed rulemaking in the Federal Register provided that any person desiring to participate could do so by filing, within a prescribed time, written statements of facts, views, or arguments. NTTC in its initial response submitted a petition for reconsideration requesting that cleaning and disposal costs be reported by natural account classification under the Terminal Activity. NTTC reemphasized the significance of these costs to tank truck carriers and provided statistical revenue and expense comparisons in support. They contended such costs are significant to both tank truck carriers and the public. They stated the proposal in the notice was contradictory, inappropriate, and offered no guidance or direction in accounting for cleaning and disposal costs. Subsequently, on November 17, 1975, NTTC filed a petition in which it recommended that cleaning and waste removal costs be recorded in Activity 4, Platform, rather than Activity 5, Terminal.

DISCUSSION AND CONCLUSIONS

The objective of this proceeding was to determine if billing and collecting and cleaning and disposal costs of instruction 28(A) carriers warranted revisions to the uniform system of accounts.

We concurred with the respondent's arguments regarding the expansion of the Billing and Collecting Activity. These cost have reached a level of significance and should be segregated and identified. We have amended the regulations to segregate the Billing and Collecting Activity in order to provide proper identification of costs and the accumulation of relevant financial data.

We recognized the increasing significance of cleaning and disposal costs to tank truck carriers; however, we did not believe the respondents provided sufficient evidence to warrant a revision to the uniform system of accounts for these costs. Extensive cleaning and disposal costs are unique costs of tank truck carriers. All instruction 28(A) motor carrier of property incur some cleaning cost prior to reusage of vehicles. Generally, this cost is insignificant except in the case of tank truck carriers. NTTC presented statistical data comparing classes I and II tank truck carrier operating revenues to total instruction 28(A) and instruction 27 operating revenues. The percentage relationship of tank cleaning and disposal costs to total tank truck carrier operating revenues was significant. After considering the additional evidence we believe the uniform system of accounts should be revised to segregate tank cleaning and disposal costs.

NTTC initially proposed to account for cleaning and disposal costs by natural account classification under the Terminal Activity, and later recommended the Platform Activity.

We contend both alternatives are inappropriate. Tank truck cleaning and disposal costs are transportation costs directly related to the transportation of freight. As defined in the Uniform System of Accounts for Class I and Class II Common and Contract Motor Carriers of Property, costs incurred in the operation of revenue vehicles should be classified in the Line-haul Activity. Only costs of operating terminal facilities are classified as terminal expenses. Likewise, costs of operating platform facilities are classified in the Platform Activity. The nature of tank cleaning and disposal costs prohibits these costs from being classified as either terminal or platform expenses.

We believe the uniform system of accounts should be revised to provide a separate activity to account for cleaning and disposal costs. Presently, instruction 28(A) carriers are required to combined Activities 1 and 2, Line-haul and Pickup and Delivery, respectively, under the Line-haul Activity for accounting and reporting purposes. As revised, the uniform system of accounts will require tank truck carriers to account for cleaning and disposal costs by appropriate natural account classification under the Pick-up and Delivery Activity. These carriers will be designated as instruction 28(C) carriers in the instructions and definitions. This revision will provide proper segregation and identification of cleaning and disposal costs for both Commission and internal management information purposes.

Guidance in accounting.-NTTC stated the Commission and the uniform system of accounts offered no direction or guidance in accounting for tank cleaning and disposal costs. We believe there is no basis for this contention. The uniform system of accounts provides appropriate definitions and instructions to aid in selecting the proper activity and natural account classification for all carrier costs. We also interpret the prescribed accounting and reporting regulations upon request. We believe adequate guidance and instructions exist and the rules adopted in this proceeding will provide identification of tank cleaning and disposal costs.

FINDINGS

We find that Part 1207 of Chapter X of Title 49 of the Code of Federal Regulations should be amended as detailed in the appended statement of changes; and that such rules are reasonable and necessary to the effective enforcement of the provisions of part II of the Interstate Commerce Act, as amended; that such rules are otherwise lawful and, to the extent so found in this report, consistent with the public interest and the National Transportation Policy of 1969.

An appropriate order will be entered.

APPENDIX A

Amend part 1207-Class I and class II common and contract motor carriers

CLASS I AND CLASS II MOTOR CARRIER INSTRUCTIONS:

The text of instruction 28, section A, carriers other than household goods carriers, paragraph (a), is revised by separating the Billing and Collecting Activity from Activity (5) and designating Billing and Collecting as Activity (3). (Carriers of liquid petroleum products in tank trucks, see section C below.) As revised the text reads: 28 ***

Section A.-Carriers other than household goods carriers and liquid petroleum products in tank trucks. (a) All instruction 28 carriers, other than carriers of household goods and liquid petroleum products in tank trucks, shall distribute expenses to the following activities:

(1) ***

(3) Billing and Collecting (5) Platform and Terminal

*

The text of instruction 28 is further amended by adding section C. As amended the text reads:

28 ***

Section C.-Carriers of liquid petroleum products in tank_trucks.—All tank truck carriers of petroleum products and derivatives, chemicals and other products detailed in 49 CFR 1040.2(d) shall follow the instructions and distribute expenses in accordance with section A except for tank cleaning and disposal costs. These expenses shall be accounted for and reported separately in Activity 2, Pick-up and Delivery, by natural account classification.

At a General Session of the INTERSTATE COMMERCE COMMISSION, held at its office in Washington, D.C., on the 10th day of February 1976.

No. 32155 (SUB-NO. 4)

REVISION TO THE UNIFORM SYSTEM OF ACCOUNTS FOR COMMON AND CONTRACT MOTOR CARRIERS OF PROPERTY

Consideration having been given to the matters involved in this proceeding, and the said Commission, on the date hereof, having made and filed a report herein containing its findings and conclusions, which report is hereby made a part hereof:

It is ordered, That Part 1207 of Title 49 of the Code of Federal Regulations be, and they are hereby revised to read as shown in the appendix to the above mentioned report.

It is further ordered, That the prescribed amendment shall be effective for the year beginning January 1, 1976.

And it is further ordered, That, service of this order be made on all affected carriers; and to the Governor of every State and to the Public Utilities Commissions or Boards of each State having jurisdiction over transportation; and that notice of this order shall be given to the general public by depositing a copy in the Office of the Secretary, Interstate Commerce Commission, Washington, D.C., and by filing a copy with the Director, Office of the Federal Register, for publication in the Federal Register.

(Authority: 49 U.S.C. 12, 20.)